Silicon Insider: Will Hulu Replace YouTube?

March 14, 2008 — -- Hello Hulu.

Wednesday may be remembered as the day that the Big Media finally began to understand the Internet.

The occasion was the official launch of Hulu, the new broadband video site created by the partnership of NBC and News Corp. The site has been running in private beta since October (and in sorta semi-public mode for the last month) and has already gained 5 million users. That's a long ways from YouTube's 80 million, but having tried Hulu, I predict that it will catch up fast. (Hulu might even consider "graduating" the best new YouTube videos to its site and paying the honorees for the privilege.)

That's not to say that Hulu will ever supplant YouTube. On the contrary, I suspect that they will ultimately develop an interesting symbiotic relationship with each other, with YouTube being the home of the homemade, the obscure and the populist, with Hulu (or another site like it) aggregating the professional-grade productions from movie and television studios. That's not a bad combination for us consumers.

Needless to say, Hulu also has a very different business structure from YouTube. It is not a "free" site, like YouTube. Nor does it operate like iTunes in which you have to purchase content. No, Hulu is going the Third Way, the one the television world knows best: commercials.

That's sure to raise a groan out there among you readers. But the good news is that, from what I've seen, these commercials -- which run at the usual breaks in shows -- seem shorter (no local spots, like television) and of high quality. You don't like them, but you also don't insanely hate them, like we've come to do with broadcast TV commercial breaks.

What this means, in other words, is that Hulu is trying to find that sweet spot where it can compete with the online content providers, from Apple to the zillions of pirates out there, while still bringing to bear 60 years of market research and tools to maximize revenues. And this is hardly an idle exercise: with 18-25-year-olds turning away from TV toward MySpace and online gaming, the networks are looking at an aging audience -- the kind of folks who most advertisers shun.

So there is a touch of desperation in all of this. Big Media, from the music industry to TV to movies to newspapers to magazines and radio, have so far not only largely missed the boat on the Web economy but, in some cases, have made decisions so catastrophic that they will be taught as object lessons in MBA programs for a generation. Even now, it's hard to understand the reasoning behind the newspaper industry retiring or firing all of its best talent to compete with a new generation of online journalists, or the music industry deciding to sue or call the cops on its most ardent customers.

That's why the whole media world is watching the Hulu launch to see if this new business model will work. If it fails, they haven't a lot of options left.

So, the question is: Is Hulu any good? Walt Mossberg of The Wall Street Journal, the leading arbiter on all products and services electronic, gave Hulu the kind of thumbs up he usually reserves only for Apple products. That's a good sign.

And I agree. Having played around with Hulu a little, I'm very impressed by the look and feel of the site, and the easy to use navigation tools. The site is clean, intuitive and very simple -- exactly the kind of thing I didn't expect from the networks. Hulu, I think, is a winner, and may finally be the vehicle Old Media needs to regain its youth. The final stamp of approval, at least at the Malone house, was that Tad, my 16 year-old, heard about Hulu at school and started playing with it. Now it's a regular feature on his screen. And if NBC can capture Tad, who rarely watches television -- except for pirated shows on the web -- it can get anybody.

By coincidence, I ordered from Amazon this week a collection of three videos, six one-hour specials total, of a TV series from the 1950s that I watched as a very little boy and never forgot. To my mind, they are the greatest -- and certainly the most influential -- science documentaries ever shown on television. Four of them, called "The Wonders of Life" were produced by Frank Capra (yeah, that Frank Capra). The series, still with the same host, was then retitled the Bell Science Series for at least two more specials.

I've been watching them with my 12 year-old, Tim. All are constructed the same way, with an avuncular host (Dr. Frank Baxter) who leads us on a kind of mystery quest to solve a scientific riddle: cosmic rays, blood, weather, the mind. That quest includes everything from laboratory footage to cartoons, charts and graphs, live experiments, even marionettes (needless to say, there is no CGI or other special effects). It sounds crazy; but the results are magnificent, even after all these years, mostly because of the sheer confidence of the narrative (they actually believe they can teach 6-year-olds about atomic particles) and the amazing competence of the production team. It is no wonder that these documentaries are not only legendary but credited with helping turn an entire generation of Boomers into budding scientists.

Watching these shows was a reminder of the days when network television really was on the leading edge of technology (instead of trailing behind), when it understood and respected its audience (instead of discrediting it) and when it brought new ideas to its viewers (rather than the reverse today).

Hulu isn't Capra. But it's a start, and it's better than anything we've seen to date when it comes to the Old Media and the Web. The offerings are still a little thin, the inventory of content still comparatively shallow, but the structure is good. NBC and News Corp. already have signed on Warner Brothers, Lionsgate, the NBA and the NHL.

And yesterday, Les Moonvies of CBS hinted that his network might try the same thing -- or perhaps even sign on to Hulu. Either would be a good idea for the Depends Network, but to my mind the smart move would be to join Hulu and keep pumping it up with content. This is not a time to compete with Hulu, but rather to turn it into an ersatz common carrier.

And ABC? Well, now we're talking about the Mouse. And Disney is in bed with Apple, so to speak. But that doesn't mean that ABC/Disney content couldn't be on both sites -- isn't that what multiplatform selling is all about -- and give users the choice between ownership-without-ads and viewership-with-commercials.

But then, that would require the kind of strategic thinking and trust in viewers that the Networks haven't shown since, well, the '50s.

This is the opinion of the columnist, and in no way reflects the opinion of ABC News.

Michael S. Malone is one of the nation's best-known technology writers. He has covered Silicon Valley and high-tech for more than 25 years, beginning with the San Jose Mercury News, as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, the Economist and Fortune, and for two years he was a columnist for The New York Times. He was editor of Forbes ASAP, the world's largest-circulation business-tech magazine, at the height of the dot-com boom. Malone is the author or co-author of a dozen books, notably the best-selling "Virtual Corporation." Malone has also hosted three public television interview series, and most recently co-produced the celebrated PBS miniseries on social entrepreneurs, "The New Heroes." He has been the ABCNEWS.com Silicon Insider columnist since 2000.